Mr Haines' body was found on the tracks south of Tamworth in NSW on the morning of January 16, 1988, not far from a crashed stolen car.
An autopsy showed the Gomeroi teenager died from a traumatic head injury.
Mark Haines - pictured with his mother, sister and father - died from a traumatic head injury. (Supplied by Haines Family/AAP PHOTOS)
The initial police investigation concluded the 17-year-old lay on the tracks either deliberately or in a dazed state, something his family has never believed.
A new inquest is examining the circumstances of Mr Haines' death and the original police investigation, after a long campaign by his uncle Don Craigie to re-visit the case.
Natalie Maher was with Mr Haines and his girlfriend Tanya White the night before his body was found, as a group of friends went to two nightclubs in Tamworth.
Ms Maher told the inquest she parted ways with the young couple at the end of the night, only to hear about a body found on train tracks when she was woken by the 9am radio news on January 16.
The two women no longer speak because Ms White will not tell police what she knows, Ms Maher said.
"I've had frequent conversations over the years and (she's) stated she knows what happened to Mark and I begged her to tell police ... and she just will not," Ms Maher told the inquest sitting in Tamworth court house on Tuesday.
"She said she's scared."
Ms Maher said Ms White had previously told her she knew who was in the car with Mr Haines that night, as well as who was driving.
Uncle Don Craigie campaigned for a new inquest to revisit Mark Haines' case. (HANDOUT/NSW GREENS)
However, Ms Maher acknowledged she did not tell police about these revelations in her own statement to investigators in 2000.
She said she acted out of loyalty to her friend, her own youth and the number of stories being told around town about Mr Haines' death.
"There were so many rumours going around, people were assuming things, there was a lot of fear," Ms Maher said.
"Tanya said she was in fear for her life and I was in between a rock and a hard place."
Through tears, Ms Maher said she remains haunted by Mr Haines' death and his emotional funeral.
"The sorrow, the grief, the wailing of the family ... how can you not speak up?
"These people were supposed to be his friends and I'm so sorry to Mark's family and I wish I could help more.
"I'm so sorry."
The inquest continues before Deputy State Coroner Harriet Grahame.
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